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ANS :-( A)
I agree with this statement. Investment appraisal should add value to the business entity.
Investment is a key part of building of business. Businesses operate by raising finance from
various sources. For the start of the new business needs some capital or money which is we
known as in business language investment. That all source which is an investment in real
assets such as like plant, machinery or furniture. New assets cab boost productivity, cut costs
and give to business competitive edge. Some business also investment in financial assets such
like share of another business or loans to business and individuals credits. Every company to
achieved company goals in manners of profit. Investment involves outflows (payments) of
cash causing inflows (receipts) of cash. There are quite a few factors behind this:-
1>Survival of the company 2>Re-investment 3>Retained profit. 4>Invest in loss project.
Company wants to make profit so its needs to a basis decision making in investment in the
terms of projects. Company can take long term basis decision making. There are different
type of discounted cash flow method uses to make investment in called investment appraisal.
It is one like type of finance. Fundamental importance of business investment decision,
manager need a rational and realistic assessment procedure by which to appraise the
investment opportunities that come to their notice so both accept and reject depends upon for
ranking project in order of appeal. For selecting which investment opportunities to pursue and
which to avoid is a vital matter to business because:
Individual project commonly engage comparatively large and permanent
commitments of finance.
They also engage this commitment for long, often very long, periods of time.